Presently, loan servicing is a highly decentralized industry, featuring a labyrinth of heterogeneous standards and data formats across a wide variety of Participants including Borrowers, Servicers, Investors, Vendors, and other persons involved in a loan servicing process.
As a result, even a small change in a status of a given Loan, or an event relating to the Loan, may take a significant amount of time to trickle down to every participant involved in the Loan and the veracity of information is sometimes less than certain. This may result in various Participants to the Loan taking inconsistent actions based on outdated data. Moreover, Servicers and Investors lose a substantial amount of money each year due to missing loan documentation and regulatory penalties.
The systems used by many loan servicers are fragile and rigid using highly outdated mainframe programming languages, many of which were first devised decades ago.
Additionally, Participant wishing to view a status of a Loan, or to understand reasons behind certain events pertaining to the Loan, presently need to be authenticated by a relevant loan service provider and retrieve data from a variety of different locations.
In addition, the loan servicing industry is a highly regulated one. Each Participant to a Loan is custodian of at least some potentially sensitive data that may be legally protected from disclosure or inadequate data protection. Moreover, not all Participants are permitted to view all data for the Loan. For example, while a Borrower should generally be able to see every document pertaining to her Loan, a Vendor providing an appraisal should not necessarily have access to every recorded phone call between the Borrower and a Servicer.
Additionally, known loan servicing systems necessarily entail asymmetrical levels of trust. Some Participants may have financial incentives to modify certain documents (or may accidentally do so). Previous systems provide little or no deterrence to document modification.